Green Tree Servicing, LLC v. DBSI Landmark Towers, LLC
2011 U.S. App. LEXIS 18078
| 8th Cir. | 2011Background
- DBSI Landmark Towers purchased Landmark Towers and then sold interests to a tenants-in-common (TIC) structure with 28 TICs and a master lease to DBSI Leaseco.
- DBSI Leaseco subleased space to Green Tree under a master/sublease framework that required attornment to the TIC if the master lease was terminated or the interest succeeded.
- Green Tree and DBSI Leaseco intended to terminate the sublease through bankruptcy rejection and related actions, with Green Tree treating the sublease as terminated under 11 U.S.C. § 365(h).
- Green Tree sought declaratory relief that it could treat the sublease as terminated and vacate Landmark Towers; the TIC removed and cross-claimed for declaratory relief affirming the sublease.
- The district court granted summary judgment to Green Tree; the Eighth Circuit affirmed, addressing privity, attornment, and the effect of rejection on third-party rights.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether § 365(h) allows termination treatment by Green Tree | Green Tree: § 365(h) permits termination due to rejection. | TIC: § 365(h) applies only if terms support termination; attornment issues remain. | No, Green Tree may not treat the sublease as terminated under § 365(h). |
| Whether mutual rescission bars further performance obligations | Green Tree and DBSI Leaseco mutually rescinded the sublease. | Rescission may extinguish only if both parties intend; TIC rights remain. | Mutual rescission occurred, terminating the sublease obligations between the parties. |
| Whether TIC has privity of contract to enforce the sublease | TIC seeks to enforce sublease through attornment obligations. | Privity is lacking between TIC and Green Tree absent attornment trigger. | TIC can enforce via the attornment provision only if attornment is triggered; here it is not. |
| Whether attornment is triggered given who rejected the master lease | Attornment should run to TIC as successor to DBSI Leaseco. | DBSI Leaseco rejected; TIC did not succeed to DBSI Leaseco’s interest in the sublease. | Attornment is not triggered; the sublease does not require Green Tree to attorn to the TIC. |
Key Cases Cited
- Minn. Ltd. v. Pub. Utils. Comm'n of Hibbing, 296 Minn. 316, 208 N.W.2d 284 (Minn. 1973) (mutual rescission may terminate contract when intent to rescind exists by both parties)
- In re Modern Textile, 900 F.2d 1184 (8th Cir. 1990) (lessor can look to guarantor despite lease rejection)
- Mwesigwa v. DAP, Inc., 637 F.3d 884 (8th Cir. 2011) (summary judgment review standard; de novo review)
- Wurm v. John Deere Leasing Co., 405 N.W.2d 484 (Minn. Ct. App. 1987) (privity required for contract enforcement by third parties)
- Busch v. Model Corp., 708 N.W.2d 546 (Minn. App. 2006) (mutual rescission analysis and contract termination framework)